Judge scraps Oakland ban on coal shipments

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Crews move coal at the Levan transfer facility along Interstate 15 south of Nephi where a steady flow of trucks unload it before it is transferred to train cars. Utah’s Community Impact Board has awarded a $53 million loan to four coal-producing counties to invest in a deep-water port in Oakland, Calif. hoping to connect central Utah commodities with export markets. Bowie Resource Partners already exports about 1 to 3 million tons of coal from its Utah mines. (Francisco Kjolseth/The Salt Lake Tribune)

SAN FRANCISCO — A federal judge on Tuesday struck down the city of Oakland’s ban on coal shipments, dealing a blow to environmental activists and city officials who fought developer Phil Tagami’s plan to transport coal through a port terminal.

U.S. District Judge Vince Chhabria ruled the City Council’s coal ban violated its development agreement with Tagami, a prominent developer who wants to use a proposed marine terminal to transport coal from Utah to Asia.

The ruling on Tuesday stung city officials. Mayor Libby Schaaf said shipping coal through the $250 million terminal jeopardizes the health of West Oakland residents already exposed to poor air quality.

“This is a fight for the health of our community,” Schaaf said in a statement. “This is a fight for environmental justice and equity. Oakland’s most vulnerable communities have unfairly suffered the burden of pollutants and foul air for too long. We will continue to fight this battle on all fronts; not just today, but every day.”

In his order, Judge Chhabria said the city did not produce enough evidence that the coal operations would pose a substantial health or safety danger. But the judge left it open to the city to approve new regulations so long as they comply with the law.

The City Council approved the rail and marine terminal known as the Oakland Bulk Oversized Terminal (OBOT) in 2013 as part of a makeover of the former Oakland Army base. The development agreement did not prohibit transport of coal, but council members said Tagami had given his word the ore would not be shipped through the terminal near the Bay Bridge toll plaza.

Once word spread that coal was one of numerous commodities planned to pass through the terminal, the City Council in 2016 voted to ban shipments of coal and petroleum coke, an ordinance directed at Tagami’s project. The developer filed a lawsuit in December 2016.

Tagami, who is known for revitalizing the Fox Theater, did not return a phone call seeking comment. Alex Katz, a spokesman for the Oakland City Attorney’s Office, said they are reviewing the judge’s order.

Environmental groups and lawyers for the city of Oakland had argued errant coal dust would harm residents who live along the rail lines. Consultants hired by the city said emissions from the operations would be 21 tons per year, or 115 pounds per day.

It is estimated that 5 metric tons of coal would pass through the terminal a year. Tagami hired high-power law firm Quinn Emanuel Urquhart & Sullivan LLP, and was backed by Bowie Resource Partners. The operator of the terminal, Terminal Logistics Solutions, is a subsidiary of Bowie, which owns Utah coal mines.

Tagami plans to cover the rail cars — a method not used in other West Coast coal exports — and the judge criticized the city for failing to account for how covers and chemicals could be used to lessen emissions.

“In fact, the record is riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses, to the point that no reliable conclusion about health or safety dangers could be drawn from it,” Chhabria said. “Perhaps a more thorough investigation could result in a lawful determination that coal operations may be restricted at the facility, but in this case, the record was inadequate.”

Chhabria issued his much anticipated ruling after reviewing thousands of pages in documents. In January, Chhabria heard arguments during a weeklong trial.

Developer Phil Tagami“The city acted in response to serious concerns about air quality from West Oakland residents, which is an area that is already struggling with severe air pollution,” said Jessica Yarnall Loarie, staff attorney for the Sierra Club Environmental Law Program. San Francisco Baykeeper and the Sierra Club intervened in the lawsuit on behalf of the city.

“We are deeply disappointed to see this sensible, legal ban on handling and storing coal overturned. The city of Oakland had every right to use their legal authority to ban the storage and handling of coal. Scientific evidence shows that coal poses a danger to public health, and we will continue to support the city as they attempt to protect public health and safety in the West Oakland community,” she said.

In his conclusion, Judge Chhabria mentioned the ruling does not stop the city from considering new regulations.

“The city remains free, of course, to pursue future regulation of the project so long as it complies with its legal obligations, including any legitimate contractual obligations to the project developers,” Chhabria wrote.

Councilmember Rebecca Kaplan said she will contact city attorneys to evaluate Oakland’s options.

“I’m not happy about it but also not entirely surprised as I had encouraged us to consider settling the case,” Kaplan said.

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